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Trading Trendlines

Trading trendlines: It’s hardly rocket science!

A trend line is simply a diagonal line drawn on a stock chart to indicate that price is trending, and more than that, it is reacting to the trend line by moving away from it each time it makes contact with it. General consensus states that in order for a trend line to be deemed valid that it must touch 3 instances of price bottoms (or tops in a downtrend) to confirm the...
Trendline Tactics...

Moving average crossovers: Don’t cross the line!

When you draw technical indicators on a chart it can have the effect of making you feel secure in the fact that the added structure puts perceived boundaries on the price action, and with this in mind, moving averages have to be right up there in terms of their comfort blanketing ability (like mollycoddling a trader in swathes of...
Moving Averages Explained...
Opening Range

Opening range breakouts (…or was it a fakeout?)

Logical analysis would infer that chart breakouts would seemingly be the most low risk entry method for a wide range of trading systems, so why is it that more people don’t adopt this entry method which provides the ultimate confirmation signal? The main reason is that the vast majority of traders (as well as being stupid) don’t have anywhere near the level of...
Breakouts And Fakeouts...

Trading divergence: Great when it works!

Many traders use technical oscillators in the form of MACD’s, stochastics, average true range and various others indicators at the bottom of their trading charts to help them determine if a market is experiencing overbought or oversold conditions. Whilst these particular indicators all lag behind the current price action, they do have the ability to...
When To Use Divergence...
Pin Bars

Pin bars: The candles you just can’t trust!

Price action dictates that a pin bar can sometimes represent a weakness in a price move, and that a reversal could be about to commence; the logic being that the opposing traders have found good value and forced the price back up (or down) the way in which it came. Pin bars are seen to be authentic when they are of considerable size in relation to the...
Why You Can't Trust Pins...
Engulfing candles: Are they a bomb-proof trade?
When discussing market price action (which we should do because it’s important!), one of the fundamental aspects taught is to pay close attention to the candlesticks as they are forming, and then analyze them to decipher what this information is telling us about the consensus and momentum in the market. Engulfing candles are those which...
When To Trade Engulfing Candles...
Trend Reversal
Trend reversals vs Pullbacks: How can you tell?
Traders are commonly told to buy the dips, which in effect, means waiting for a stock price to pull back (as it inevitably always does) until you buy into the action. Whilst this is a relatively easy concept to understand, putting this technique into practice can be a lot more difficult. If a snap back becomes significantly large, for instance three large bearish bars on a...
When Trend Reversals Work...